Prometheus is best known for giving humanity fire, but according to Aeschylus he also brought another gift that is even more important: blind hope. To favour entrepreneurs over state intervention requires some of this second gift, except that the hope need not be entirely blind.
Covid-19 prompted fear, and limitless demands for state-mandated border closures, lockdowns, masks and distancing. Yesterday the Prime Minister reimposed mask requirements in some public settings. The great irony is that the state and bureaucratic institutions often fared disastrously during the pandemic.
The WHO misinformed the public, parroting Chinese Communist Party lines and spending months denying asymptomatic transmission. Public Health England refused to use the private sector to expand testing, allowing the virus to get out of control, while the NHS ran out of personal protective equipment.
Meanwhile the private sector responded miraculously: pivoting from making paint, beer, cars and appliances to manufacturing hand sanitiser, masks, CPAP devices, and ventilators. It then provided vaccines that saved millions of lives.
Nevertheless, almost two years on, it seems the default answer to every societal problem is for more state planning and spending; on supply chains, lorry drivers, healthcare backlogs and more.
The state cannot and should not always be the answer. Central planning restricts opportunities for entrepreneurs while state spending leaves less in their pockets to invest in new discoveries. If we allow them, when the next crisis arises, entrepreneurs will be ready to pivot and innovate us to a better place.
Adam Smith labelled the state planner “the man of system” who seems “to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chessboard”. But without seeing that “every single piece has a principle of motion of its own, altogether different from that which the legislature might choose to impress upon it”.
In government, the man of system rarely changes plans based on serendipitous discovery, gradually clarified hunches or trial-and-error improvisation. Changes depend more on who has power than on what has been learned.
Our new challenges will need more than the lacklustre inability of the planner. Just take the case of semiconductors, the micro-processing chips found in practically every modern device. The US government is about to approve $52 billion to subsidise the industry. Yet private firms are already committed to investing far more than that to build new chip foundries, while the likes of Ford and GM are entering the market to assure a more ready supply of chips in the car industry.
To punish Prometheus for his gifts to humanity, Zeus tied him to a rock where a vulture attacked him every day for millennia until he was finally freed by Hercules. Today innovators are under worldwide attack – from Jack Ma in China to Western firms facing mounting taxes and regulations. We cannot wait for millennia for a Hercules to free our entrepreneurs. We will need to do it ourselves.
Dr Arthur M Diamond Jr is an economics professor and author of a new Adam Smith Institute report: ‘Against The Man of System after Covid-19’
